Kenya’s Energy Minister, Kiratu Murangi has expressed his country’s readiness to cover half the cost of Ethiopia’s Gibe III Hydropower Project, that is, if international financial institutions reject their funding request. The surprise announcement was made when he met Alemayehu Tegenu, his Ethiopian counterpart, last Friday. Kenya has until now not only expressed misgivings over the construction of the Gibe III hydropower plant, which it claims would negatively impact its environment, but also suspicions over Ethiopia’s alleged plans to use the project’s water resources for a huge irrigation project.

Kenya’s latest position comes as a total surprise to foreign donors and international financial institutions who have supported environmental related arguments concerning the construction of the Gibe III power project. Experts have cited the project’s social and environmental impact on Kenya’s Lake Turkana, and its surrounding communities, as the principal cause of loan refusal from the financial institutions.

Earlier reports had suggested that the government of Kenya and its local NGOs had been urging the international community for the last couple of years to reject Ethiopia’s financial request as they defended their own power project.

Meanwhile, the European Investment Bank, the World Bank and the African Development Bank have still not responded favourably to the east African country’s 1.7 billion dollar loan request needed to complete the construction of Gibe III, which is set to generate an estimated power of 1800 MW.

Said a senior official of the Ethiopian Electric Power Corporation (EEPCo): “We organized an Environmental and Social Impact Assessment (ESIA) which is perfect and accepted by the country’s Environment Protection Authority, however the lenders did not support it. They are not willing to assess the said impact due to pressure from the Kenyan government and NGO’s”.

Official sources have confirmed that, despite the setbacks, the EPPCo has gone ahead with the construction project using its own financial resources. 35 per cent of the project has so far been completed, but the remaining 65 per cent is beyond the country’s financial capacity. According to the source, without any foreseeable help from the international community, Ethiopia’s only solution would have been to negotiate a deal with the government of Kenya anyway.

“We invited a Kenyan delegation in June 2009 to physically observe the project site and visit the Gibe II Hydropower Project which had been successfully accomplished at the time of their visit”, the source said. “This strategy paid off as it cleared any doubts the Kenyan delegation would have concerning the controversial ecological issues surrounding the project.” Kiratu Murangi, Kenya Energy Minister, who led the delegation, told the press about the importance of Gibe III, especially to Kenya’s power demand, and its environmental friendliness.

“But the government of Kenya still expresses misgivings,” according to our source. Their doubt, however, does not concern the project’s ecological impact. In fact, according to the Ethiopian official, Kenya’s fear of Ethiopia using Gibe III as an excuse for huge irrigation projects led to a proposal requesting the establishment of a joint committee to monitor the Power project. Ethiopia rejected the proposal on the grounds of sovereignty and denied all allegations with respect to the suspected irrigation project.

Kenya, according to the official, has since requested Ethiopia for power supply from the recently completed Gibe II power plant, despite the fact that the two countries signed a memorandum of understanding (MoU) for power supply from Gibe III.

The official notes that Kenya only complained about the environmental issues related to the Gibe III project after having signed the MoU.

Energy ministers of the two countries discussed the issue last Friday during which the Kenyan minister revealed his government’s willingness to cover half of Gibe III cost. The official believes that this development is a considerable achievement for Ethiopia. According to him, Alemayehu Tegenu is also willing to sell power from Gillgel Gibe II in return.

Kenya needs to import between 200 and 400 MW of power from to Ethiopia.

Sudan and Djibouti were among the first countries to express their interest in the importation of power from the Tekeze and Gilgel Gibe II power plants, respectively. Tekeze which has a generating capacity of 300MW is set to sell power to Sudan whilst Gilgel Gibe II, with its generating capacity of 420 MW, will serve Djibouti. Transmission lines to Djibouti and Sudan are under construction.